My January 11, 2012 blog received the most feedback of any blog published to date. The comments usually started, “I really liked” or “It was really well written” and continued with the pregnant pause and a “but.” What followed was a question such as “what does it have to do with HR or my Organization?” or “what does it have to do with what your firm does?” or “as a new business is that an appropriate topic for you to write about?”

I think these are all fair questions so I decided to put my planned blog on hold to address these queries. Let me use a real example to illustrate how the news story 'Congress got Richer'applies to organizations and what HR Metrics Coach does.

Our “Time to Fill” and “Cost of Hire” is the highest in the Company

An HR Business Partner contacted us a few months ago because the newly published HR Dashboard revealed her business unit had the longest Time to Fill (186 days) and a higher Cost of Hire than other business units. Her first impulse in calling us was for help in reducing the measurements and to get her Business Unit more in line with the rest of the organization. In this example, her Business Unit is analogous to Congress in the earlier blog being compared to the average business unit.

My dear friend and colleague Jay Jamrog’s first reaction to an issue like this is “who cares?” “Are you getting a better ‘Quality of Hire?’” he would ask. I don’t disagree with Jay’s instincts to understand the impact of the measure rather than just responding to a cost or efficiency metric. Probably because of my legal training, we follow a different protocol based on the old legal defense joke:

You have no oatsIf you have oats they were not eatenIf they were eaten it was not by a goatIf they were eaten by a goat it was not my goat, andif it was my goat, he was insane

Let me explain.

1. Check the math

Nine times out of ten, the analytics is correct, but on the few occasions when it is not, nothing makes you feel more foolish than creating an action plan to address an issue that either did not exist or cannot be recreated. Checking the math includes reviewing the SQL or query, re-pulling the data from the source, and confirming the calculations. While our HRIS systems have gotten more sophisticated, they are still subject to human error.

2. Frame the issue

This is the problem with the Congress getting richer story. That story frames Congress as a representative sample of the “average American,” but as I demonstrated, nothing could be further from the truth. Congress is older and better educated than the average American, and age and education are key, direct drivers influencing wealth attainment.

In this example, our client’s business unit is an engineering function. Her business unit only hires experienced engineers and prefers those with advanced degrees from a very short list of elite universities. Not only is there a high skill threshold requirement for her roles but the work is primarily performed in a small Midwestern city with roughly 100,000 residents. While the quality of life of this location is quite desirable, it is not for everyone, especially dual-income families who struggle to find work for the trailing spouse.

The other business units do not have the same challenges sourcing talent as our client’s Business Unit. Business Units with just as high skill requirements are located in more urban areas or offer the opportunity to telecommute. Other Business Units with operations in the same Midwestern city require low- or semi-skilled labor and are able to draw upon the local community to fill their open positions.

Given the unique “requirements” of this Business Unit, it should be expected to experience longer “Time to Fill” and a higher “Cost of Hire.” This is an example where benchmarking against the rest of the organization creates an unrealistic expectation. We recommend this Business Unit benchmark against itself over time or with other organizations with the same geography and specialized skill roles.

3. But is it a problem?

We have validated the analytics, we understand the context and what is driving the analytics; now we turn our attention to identifying whether there is an opportunity to be addressed or the “who cares?” question. We do not assume a high efficiency metric necessarily indicates a problem, but it does signal a need for attention and a deeper look. The difference may seem subtle but just because the check engine light is on does not mean we need to replace the entire engine. It is a possibility, but without further investigation it would be imprudent to assume the worst. A desire to just react and assume the worst is something we see often with clients.

First, we investigate the impact of a long Time to Fill. Is the Business Unit losing business because of a lack of staff? Are there delays in project completion because positions have gone unfilled? Is the current staff less productive due to overwork or lower morale? In this case, we were unable to quantify a negative impact due to the Time to Fill. We were able to estimate a nominal value for each day that Time to Fill was shortened, which we used for later analysis.

We looked into why Time to Fill was so long and found three recurring themes: Notice period, school year and relocation. Since 90%+ of new hires already had jobs, they requested adequate time for their former employer to make arrangements or to complete their contribution to their projects. Our client greatly valued this sense of fair play and professionalism and deemed this was not an opportunity to reduce Time to Fill. The Business Unit was at the mercy at another area, the school calendar. Many new hires requested to start after the school year or semester ended so their children could complete their education. Finally, the rough and tumble real estate market created issues and delayed start dates.

Next, we scrutinize the Cost of Hire figures to determine where, if any, potential savings existed. There was a plethora of different types of expenses to review, but they fell into three major categories: search, incentives and relocation. Before judging the value of these expenses, we looked at tenure and other quality measures to determine if these expenses were correlated with performance. We found the incentives were highly correlated with longer tenure and high performance, and relocation was actually negatively correlated. We were able to show the client that each $1 spent on the hiring process did not have an equal return.

We determined the long Time to Fill was not an issue for this Business Unit but there were opportunities to better leverage the Cost of Hire spending.

4. Workforce Intelligence or Insight

The final step we took with this client is what makes us sing! We examined her workforce to see what insights we could find that would help the HR Business Partner manage the workforce more effectively and add value to the business. Two of our observations are described below.

Eighty percent (80%) of the Business Unit’s new hires graduated from one of four elite universities. The question we examined was, “were the remaining 20% of new hires as successful as the preferred graduates?” The answer was a resounding “yes” and in some ways they were more successful employees. We also found these employees had a shorter Time to Fill and lower Cost of Hire than their elite university counterparts.

Of the four elite universities, there was a difference in Quality of Hire. One of the four universities actually had a poor track record of longevity. Removing these employees actually lowered the Cost of Hire but did not impact the Time to Fill calculation.

Based on these insights and others, the client was able to advise her hiring managers on their hidden bias when hiring. We believe they will be able to lower the Cost of Hire while actually improving Quality of Hire.

What does HR Metrics Coach do?

Our mission is to help organizations leverage their workforce data asset. It has been our experience that organizations expect their line management, or HR business partners, to have the capacity and capability to conduct deep workforce analysis. Unfortunately, given the numerous and constant competing priorities and the lack of simple tools and time, this is not a realistic expectation.

As a consultant, HR Metrics Coach can provide an objective assessment of the organization. We also serve as a trainer, teaching clients inside and outside of the HR function how to measure their workforce effectiveness. It is not our goal to take on your reporting and analytics function but serve as an as-needed coach. You can learn more about our specific services here.

HR Metrics Coach

The HR Metrics Coach mission is to use measurement applications and scientific methods to assist organizations in maximizing their human capital data for the benefit of both the enterprise and the individuals.